Will Bloom Energy Live Up To The Hype?

from the off-the-grid dept

Last Sunday, Bloom Energy was covered by 60 Minutes for developing a fuel cell technology that can produce cleaner energy more efficiently from a variety of fuels. The Bloom Box promises to deliver reliable electrical power to data centers as well as homes, without transmitting power over long distances, since its "energy servers" can be located where the power is needed. After 8 years of development, Bloom Energy has emerged from its startup stealth-mode with 100kW generators that are already operating at Google and eBay campuses, providing electricity at prices in the $0.08/kWh to $0.10/kWh range (average retail electricity costs about $0.11/kWh). According to the press releases, five "parking spot"-sized Bloom Boxes power about 15% of one of eBay's campuses, and Google's Larry Page says that he looks forward to being able to power a whole data center.. someday.

The 60 Minutes piece hinted that Bloom Energy could be a flop like the Segway -- since both Segway and Bloom Energy share Kleiner Perkins as a backer. Beyond that, though, the amount of skeptical analysis for Bloom Energy seems a bit lacking. The story of a secret lab creating a solution to the world's energy problems is a great fiction. But the reality is likely far less inspiring. Plenty of others point out the reliability and cost issues for using a technology that hasn't yet been around for a decade and takes about 5 years (give or take a couple years) to pay for itself from savings in energy efficiency. A 100kW system costs about $750,000 -- so it's a sizable upfront investment for a company to adopt. Additionally, while the system can run on a variety of fuels, Bloom Boxes are currently using natural gas, which is still a fossil fuel with all the associated drawbacks -- even if the power is generated more efficiently.

Ultimately, more competition for generating clean power benefits all energy-intensive businesses. And as some observers note, these Bloom Boxes may help augment other energy technologies -- such as wind or solar -- for more consistent and reliable alternative energy. But there might need to be a much clearer advantage to installing Bloom Energy's off-the-grid generators. Certainly, Bloom Energy has done a great job of getting lots of attention for its technology, but it hasn't proven that fuel cells will revolutionize the economics of energy production. In fact, more efficient use of fossil fuels may actually delay our move away from non-renewable fuels, meaning Bloom would fall short of the hype in more than one way. Instead of a cost-effective alternative to fossil fuel-based energy, it has so far only delivered a somewhat expensive new way to continue using natural gas.

In the end, though, this demonstrates how true innovation is almost always an ongoing process rather than a "flash of genius." Time and time again we hear about amazing breakthroughs coming out of some secret proprietary lab -- but when they're actually revealed, the reality is just another marginal improvement. It's what happens next that's really important. Bloom is getting all sorts of hype for doing something revolutionary, but the result appears just kind of ordinary, at this point. The real question is: can it actually continue the process of innovation to become something that lives up to the hype? It's that process that's really important, not the initial concept.

How efficient is the Natural Gas Grid???

All good points. One thing that I often see in clean tech hype is counting the gains but not counting the losses. This is a net-net world we live in.

As to Natural Gas, the recent finds have made natural gas a very very attractive fuel for the US -- lots of it and relatively clean when compared to coal and oil.

But to my point, what is the efficiency of the Natural Gas Grid? It is clearly not 100% (it takes some energy to deliver the gas from well head to point of use). For all the discussion of how you will have no losses of electricity because it is generated locally, that isn't the fair measure of success. You have to take into account the transmission of gas itself (and then you have to compare the Bloom Box conversion efficiency as compared to the electric plant, and so on...)

Not there yet ... it is coming slowly.

I work in the Hydrogen Fuel Cell industry, the point about innovation being a ongoing process is the only thing keeping me in the industry. (And the lack of anything more exciting in this economy) The costs in both the initial outlay and carbon footprint of fuel cell technology far outweigh the benefits at this time. Most hydrogen is delivered in heavy cylinders over long distances in diesel trucks or the hydrogen is reformed from fossil fuels. The systems are costly, maintenance intensive and unreliable.... for now. They are getting better and in time we will work out the issues. I do think Bloom is hyping something ordinary and not fully developed, and will likely fail after relieving many of their money.

The 60 Minutes piece also stated that Google, eBay and FedEx costs for installing these Bloom Box systems were partially subsidized by California's 20% Clean Energy break and the US Government's 30% (I may have my numbers mixed up) knocking the initial cost in half. The program ALSO stated that those companies have already saved hundreds of thousands of Dollars during this testing phase on energy costs.

So instead of shelling out $300,000 (as one company's costs were calculated) a multi-billion dollar corporation only had to pay a net total of $150,000. The energy savings had already started to pay for itself.

A final note, the inventor, K.R. Sridhar suggested that his company may be able to produce a version for the average home for around $2,000. A small unit that could be installed next to the home air-conditioner unit. A 42-inch flat panel TV costs around that.

Add in competitor companies with established R&D such as General Electric and Siemens, we could see a new market for this type of home generators, and that would drive down costs even more. Provided the technology doesn't get locked up in patent battles.

delivery systems

This has likely been pondered by greater minds than my own, but why can't hydrogen be transported through our water system, using the same pipes? Seems like you could transmit both, and separate them at point of use.... no?

This is a naive understanding, I know, but it could help if the correct minds get involved.

Re:

Did you even watch the show?

Did you even watch the 60 Minutes show OR read the Bloom Energy website? For example, "Bloom Boxes are currently using natural gas" is a false statement - it was specifically mentioned that some are running on biogas.

Some other points;

- electricity costs MUCH more than 11c/kWh in many parts of the world. At 20c/kWh the economics are quite a bit different.

- the $750,000 price tag is actually quite reasonable considering they have zero economy of scale at the moment and relatively new technology. The price will come down quite significantly.

- not to forget about the tax breaks the companies acquiring these boxes get; they hardly end up forking all of the $750k

- 60 minutes did not "hinted that Bloom Energy could be a flop"; it merely pointed out that not all of the investors' investments were successful. Big deal, they never are. Kleiner Perkins still has one hell of a track record in the industry, so I really don't see how having them as backers could be seen as a negative thing.

Re: delivery systems

You can't send gas in water pipes:

1) Water pipes do not have relatively constant slope like waste pipes do. When commissioning a water pipe you must get ALL of the air out, if you trap an air bubble, you wont get water flow. Try turning a cup upside down and push it into a sink full of water 100% straight, your goal is to get water to fill up the cup. Can't do it, no imagine that was your pipe.

2) A good, new water distribution system leaks about 10% or its contents....old systems are much higher.

3) Old watermains are often metal and break frequently, I'm not a fan of welding and sparks of clanking metal near hydrogen.

4) Point of use? you mean change the water meter of every household in north america?

Re:

The 60 Minutes piece also stated that Google, eBay and FedEx costs for installing these Bloom Box systems were partially subsidized by California's 20% Clean Energy break and the US Government's 30% (I may have my numbers mixed up) knocking the initial cost in half.

I guess if the government pays for it then *anything* can be made cost effective. Except for the taxpayer that pays for it, of course.

The program ALSO stated that those companies have already saved hundreds of thousands of Dollars during this testing phase on energy costs.

Let's see, government paying for half the cost, Bloom picking up the other half for these "demonstration projects" (possibly even paying those companies a "testing fee"). Yeah, I think I could make money on a deal like that too. I'm not impressed.

A final note, the inventor, K.R. Sridhar suggested that his company may be able to produce a version for the average home for around $2,000.

Hey, I guess anything is possible. I might even win a million dollar lottery this week, but I'm not holding my breath.

Re: delivery systems

Chris,

Molecular hydrogen (H2) at normal temperature and pressure is a gas. So, separating it from water would be easy (it would bubble out), but I dont think it would be a good idea to have water and a gas flowing on the same pipes. It's bound to cause problems, and it would force every house to have a means of separating the H2. You don't want to open a tap and have highly flammable and explosive gas come out of it.

Plus, if both water and hydrogen comes on the same pipe, at around the same constant mixture, what do we do when we just want water? Or just a lot of hydrogen? You ether store or waste what you don't need. So... not a good idea.

However, hydrogen is a component of water (H2O remember?). You only need electricity to release H2 from water.

Re: Did you even watch the show?

where is all this biogas coming from? natural gas is much cheaper than biogas, so if they are using biogas, then their costs are not as practical.

since when is $750,000 a reasonable price?! Can I have some of your money? Only $500,000 will do. I, too, have zero economies of scale, but I promise to clone myself soon.

btw.. it's 60 Minutes' *JOB* to ask tough questions and not just promote any new startup that thinks it's revolutionary. They actually did a sh*t job of journalism in this show b/c they didn't interview any physicists/scientists on the feasibility of these magic energy boxes. good job, Leslie Stahl!

Re: Did you even watch the show?

I did the math with electricity and gas prices here in Portugal right now. Grid power is about 0.1285€ per kWh. With a Bloom Box and natural gas at the prices I get in my house (for heating and cooking) I could make power at 0.1228€. Not big savings are they?

Sure, if I was a big gas consumer, and running a 100kWh Bloom Box 24/7 I would be, I could get gas at half price, but I could also get cheaper electric power from the grid. Even with that best case scenario of 50% cheaper power, I would only save about 55000€ per year. Instead of buying around 110000€ of grid power, I would buy 55000€ of natural gas to run one 100kWh bloom box. That would take 10 years to break even on the investment of $750,000 (around 552,000€ at current exchange rates). That's excluding maintenance, possible (if not quite probable) gas price increases, etc.

Re: Re: Did you even watch the show?

Yes. Which is exactly why I'm not a big fan of these let's-just-dismiss-the-whole-thing-because-we-like-making-categorical-assumptions-posts.

Well, I'd say the assumptions of zero maintenance, zero installation costs, 100% utilization and unlimited equipment life were all *very* generous to Bloom. Just which of the other actual numbers used would you call unrealistic? It seems to me more like you'd really rather not see the numbers discussed at all. Now why would that be?

Re: cool

Lots of harsh comments

This is obviously not a mainstream technology, so you can't compare consumer costing with the value this will add. What's obvious is that backup natural gas generators can be used where diesel generators are currently being used. I know that hospitals and shopping centers all have diesel backup generators, and while not currently used very often, I believe the cost of these large generators is comparable to the Bloom Box.

Particularly in Australia, there's an abundance of natural gas which the government is trying to get people to use in place of electricity, petrol and diesel. Having large energy syncs switch to natural gas generators would definitely be a step in the right direction ... considering the alternative is brown coal based electricity and diesel backup generators.

Re: Lots of harsh comments

I know that hospitals and shopping centers all have diesel backup generators

No, actually, they tend to have generators powered by natural gas engines. Natural gas is preferred because it does not go bad in storage like diesel does. It also does not usually require storage tanks and it burns much more cleanly than diesel.

I believe the cost of these large generators is comparable to the Bloom Box.

You believe wrongly. The Bloom Box is much more expensive.

...considering the alternative is brown coal based electricity and diesel backup generators.

Obvious test of viability

Peak loads are big expenses to power companies. They get paid the same rate 24 hours a day, but pay more to run stations that can be turned off and on easily.

If this device were really more efficient at turning natural gas into electricity than conventional technologies (and I mean total efficiency, including cost of capital and maintenance) a power company would buy a boat load of them to use as a peak load generating station.

When I see that happen without external coercion, I'll know that it's a good idea.

Re: delivery systems

Hydrogen cannot be tranported through regular plumbing. As others mentioned, water leaks in current plumbing systems are tolerable, but in a hydrogen system are incredibly dangerous. Unlike most gases, hydrogen is explosive in through a very wide range of mixtures with air. So even a tiny leak presents an enormous explosive risk. Compared to natural gas, which is explosive at high concentrations, and becomes less explosive (almost negligble) at lower concentrations, while hydrogen remains explosive at very low concentrations (remember lighting the test tubes in high school chemistry - that was a very low concentration).

Additionally, steel and other alloys of steel become brittle and are more likely to fracture upon exposure to hydrogen. To prevent this, vessels to contain hydrogen must be sealed/coated to prevent exposure. While not expensive to do, it is expensive when replacement of existing infrastructure is considered.

Bloom Boxes are currently using natural gas...

It has been a couple of days since I watched the 60 minutes piece, but I was under the impression that eBay's boxes WEREN'T using gas, but some kind of biomass fuel. Please feel free to correct me; I don't have time right now to go back and re-watch the clip.

Re: delivery systems

Hydrogen is in a gaseous form at STP (standard temperature and pressure). To pump enough hydrogen through a standard pipeline to provide enough power to would require several hundred pascals of pressure so as to keep the hydrogen in liquid form (essentially, you need to make the energy density higher by increasing the fluid density through phase transition). That kind of pressure is ripe for exploding pipelines. Exploding pipelines are not nice.

Economics Aside

Interesting,

No doubt, as far as fuel cells go, this is a good step forward, but the economics don't work out now, and in the several decades it will take to see any ROI, I just don't see it as feasible even as electric rates continue to rise.

In a few months a far more logical electric generator system will be introduced which will demonstrate ROI in several years, not decades, and it does not require any fuel that bloom box does.

Say goodbye to solar, wind and fuel cells for this is well beyond any conventional renewable energy systems I have researched, and we won't need 60 minutes to bolster interest.lol

Bloom Energy

Much of the cost of electricity comes from government regulation and the maintenance of power grids. Long term, Bloom Energy will have to "face up" to the costs of regulation (which I strongly support, but it is expensive) and the cost of maintenance, both of the cells and of some sort of power distribution system (maybe not needed for Google and Ebay, but generally ...).
So, Michael, I share your caution, and agree with your analysis wholeheartedly.

Less flakey than most engergy announcements

I don't know if Bloom will succeed, but you have to give them credit for not shooting their mouths off and showing nothing, or some questionable lab experiment, like most new-energy companies. Usually the best products these businesses generate are press releases. Here you have a company that has built a REAL BOX, and even better, has several installed in REAL COMPANIES that care about cost effectiveness. To me that puts them in a FAR better position on the BS scale than the majority of EV and energy stories. It may still fall short, but it sure ain't Steorn.

Bloom Energy poised to grow

Bloom Energy is poised to change the clean power market! With proven results at FedEx, Google, BoA, and eBay, Bloom has shown how they can reduce energy costs and carbon footprints. Let’s hope the price drops from $700K to the target of $3K fast enough to move from commercial to residential buyers.

Researching how to make your company, product, or next project more Green? Go to www.greencollareconomy.com for sustainability white papers and the largest b2b green directory on the web.

look, it like this, i and probably you too dont need 100kW, all i need is enough to run a few pc's a few HD LCD's, a wireless router or two and perhaps a 12v fridge if they ever get around to fitting these 12v compresors to our average unis OC....

might be okay for data center power generation

according to the comments at that site... this technology might be good for data centers that want/need independent power generation on-site. data cneters have different reliability requirements and peak power usage than households, so maybe it makes more sense to own Bloom Boxes instead of relying on utility companies.

Bloom Energy never says "when" they'll produce a $3K home version of their fuel cells... if they were serious about it, they'd at least be testing some smaller units that could power mobile homes or something.

Same efficiency at more than 10x the cost of gas turbines

The electrical efficiency of solid oxide fuel cells (SOFC) is in the 50-55% range, which is higher than for thermal power plants that use steam turbines but only on a par with combined cycle gas turbine (CCGT) power that costs less than a tenth of Bloom Energy's servers.

Both SOFC and CCGT put out about 0.8 lb of CO2 per kWh generated, but while Bloom's unsubsidized equipment cost is $7,000-$8,000 per kW of peak capacity, CCGT capacity can be added to the grid for a mere $600 per kW.

CCGT are a proven technology, the combination of two other technologies (steam turbines and gas turbines) that have been in industrial use for more than a century / more than half a century, respectively. CCGT achieve thermal efficiencies of up to 58%, which works out as an electrical efficiency comparable to the SOFC's 50-55%, hence the virtually identical CO2 output per kWh.

Even if we give Bloom the benefit of doubt and hope their fuel cells will prove to be reliable and low maintenance of their 10 year life cycle and that production costs will come down as volume increases, it still means they will have to reduce their costs by over 90% and establish a near perfect record just to pull even with current proven technology.